Business travel settles as US economy lifts

02 Jun 2012 2044 | Business & Trade Fairs

A slight upturn in the United States economy, instability in Europe and slowing growth rates in key markets has weakened the demand for business travel.

According to the 2012 American Express/CFO Research Global Business and Spending Monitor, only 5 percent of businesses in the Asia Pacific region expect to spend at least 10 percent more on business travel this year.

Head of American Express advisory services for the Asia Pacific Dr Carl Jones said diminishing growth in key markets and a surge in the US economy has altered travel trends.

“Companies in Asia Pacific are still shying away from doing business in Europe so airfares to this region continue to fall. Interestingly, fares to the Americas have increased 2% in the last quarter - the first quarter on quarter increase in the last six months.

This is largely due to certain carriers - specifically in Australia - increasing prices in response to the recent positive performance in the US.”

Domestic fares throughout Asia rose just 1 percent in the last quarter, with Intra-Asia fares performing similarly.

“As key markets in the region experience the slowing down of growth rates, domestic and intra-Asia air fares are likely to see moderate growth throughout 2012,” Mr Jones said.

Australian domestic fares jumped 3 percent quarter on quarter and increased by 14 percent year-on-year.

“High fuel prices are here to stay and as domestic travel continues to be a priority for Australian businesses, this may continue to push prices up in the next 12 months, maintaining some level of fare growth.

However, as the demand for domestic travel continues, the last two quarters of the year may see domestic carriers respond to this and increase capacity on key domestic routes. This would ultimately lead to the stabilisation of these fares by the end of 2012.”

Airfares to the Americas from Australia saw a 12 percent increase year-on-year, as carriers “recognise the opportunity for invigorated travel to the region.”

Sourced: etravelblackboardasia